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Old 09-12-2015, 08:42 PM   #41
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I have now added the expenses for each asset in the CFP’s recommended portfolio. Please provide feedback when you have time. Thanks!
8.4% - SCHA – Schwab US Small-Cap ETF – 0.08%
12% - SCHM – Schwab US Mid-Cap ETF – 0.07%
12% - SCHX – Schwab US Large Cap ETF – 0.04%
2.5% - NPFFX – American Funds New Perspective F1 – 0.82%
2.5% - OAKGX – Oakmark Global 1 – 1.11%
3.8% - IVVYX – Ivy International Core Equity Y -1.27%
3.8% - SCHF – Schwab International Equity ETF – 0.08%
5% - BREFX – Baron Real Estate Retail – 1.32%
3% - Cash
12% - LALDX – Lord Abbett Short Duration Income A – 0.59%
7.5% - PDBAX –Prudential Total Return Bond A - 0.83%
7.5% - BICAX – Sterling Capital Total Return Bond A – 0.81%
5% - BASIX – BlackRock Strategic Income Opps Inv A - 0.90%
5% - MASAX – Main Stay Unconstrained Bond A - 0.98%
10% - TPINX – Templeton Global Bond A – 0.89%
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Old 09-12-2015, 08:46 PM   #42
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Before you meet with your planners next week you really need to educate yourself about funds, fees, and expenses. Vanguard has a good model portfolio selection tool, based on your needs, that you can start with. Try this first, it is very easy to use and will give you specific recommendations of low cost funds you can use on your own without an expensive "adviser."
https://personal.vanguard.com/us/fun...recommendation

You can then click on the recommendations for the specific information on that fund, including the expense ratio.

An overview of portfolio allocations models are given here:
https://personal.vanguard.com/us/ins...io-allocations

Then do some probing with them to see why they want to put you into higher expense funds in addition to charging you the 1% fee. You can report what they tell you here if you want feedback. Good Luck!
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Old 09-12-2015, 08:53 PM   #43
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If we moved our IRAs to Vanguard would they be able to send monthly draws from our funds the way we have it set up now, and would they help us with RMD next year when my husband is 70 1/2? How do the distributions work? Thanks!
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Old 09-12-2015, 09:07 PM   #44
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If we moved our IRAs to Vanguard would they be able to send monthly draws from our funds the way we have it set up now, and would they help us with RMD next year when my husband is 70 1/2? How do the distributions work? Thanks!
Yes and Yes, no problem.

There are many ways to handle withdrawals from your accounts. It's easy to set up an automatic fund transfer from Vanguard to your bank account--you can set it for any amount, any frequency you want. And Vanguard (or any other fund company) will tell you every year how much your husband's RMD is for the coming year (for the accounts you have with them).

Regarding your funds--dang, those expenses on the non-Schawb funds are worse than I feared. You can set up a much simpler portfolio yourself, one that you'll understand and which makes sense, and costs you a LOT less in fees.
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Old 09-12-2015, 09:19 PM   #45
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Thanks, and what portfolios do you favor? We are retirees. Apologies if you answered this already. I have a lot of helpful replies and need to reread them all.
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Old 09-12-2015, 09:35 PM   #46
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Thanks, and what portfolios do you favor?
Yep, I already chimed in with the long-winded post here. In a nutshell--I recommend you not hop right to the construction of a portfolio before you take some preparatory steps. You shouldn't feel any pressure to get this done immediately.

But if you just want to make one right now anyway, I think California Man gave some very good advice in post #42. The Vanguard site can help you determine your requirements and build a suitable portfolio. Answer the questions at his first link and give careful thought to each one (remember that the "pensions" it asks about includes any Social Security you'll receive). Then go to the second link and look at the attributes of some sample portfolios. You'll probably come away with some very useful insights into what would work for you.
You can always come back here and post questions about constructing a portfolio (I'd recommend you start a new thread for that, this one has drifted far away from the subject line).

If you look at the answers you've received already you know that many here believe you should end your relationship with this CFP. I agree.
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Old 09-12-2015, 11:09 PM   #47
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I've been in the board for many years now, and I don't think you will find one soul that doesn't think that this CFP is a charlatan. Truly. The first thing you should do is just don't go back to him. Then take time to learn about this yourself. One good book will give you enough knowledge to be capable. Then you can go from there. But, truly, this CFP is NOT the way to go.


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Old 09-12-2015, 11:32 PM   #48
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If you don't feel comfortable with DIY and must have some handholding when it comes to managing your investments, consider Vanguard Personal Advisor services. They're more expensive than DIY (0.30% AUM) but probably a far better option than the CFPs you've had so far.
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Old 09-13-2015, 08:31 AM   #49
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I may not be adding much to the excellent opinions here. To answer the question: Bond funds in retirement, bond funds should be a part of asset allocation and the main reason is not to make as much as stocks, but to stabilize your portfolio in volatile situation, like the coming recession and or bear market(if it comes). When the bear market comes and the S&P is losing 35%, the BF may be losing just a tiny fraction or may be gaining 1%.
I've read in WSJ, to put some in Vanguard Intermediate term BF.
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Old 09-13-2015, 09:06 AM   #50
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I've been in the board for many years now, and I don't think you will find one soul that doesn't think that this CFP is a charlatan. Truly. The first thing you should do is just don't go back to him. Then take time to learn about this yourself. One good book will give you enough knowledge to be capable. Then you can go from there. But, truly, this CFP is NOT the way to go.
Well, I guess this will be a first for you then, but please include me among the souls who DON'T think that this CFP is a charlatan. In fact, I would go so far as to say that the posts in this thread which go out of their way to trash the CFP's integrity are doing a serious disservice to OP's search for unbiased investment advice.

Based on what OP has posted, the CFP has proposed investments consisting exclusively of highly rated ETFs and mutual funds and, where applicable, has waived any front end loads. I don't see the slightest evidence that the CFP is trying to make extra profit at OP's expense by the selection of the mutual funds in the proposed portfolio.

This should not be surprising. If the financial advisor truly is a CFP, he is required to adhere to a fiduciary standard of putting his clients' interests ahead of his own when giving professional advice. Quoting from the cfp.net website:

Quote:
FIDUCIARY STANDARD

What is the “fiduciary standard of care?”

The fiduciary standard of care requires that a financial adviser act solely in the client’s best interest when offering personalized financial advice.

Who follows the fiduciary standard?

Under federal law, in particular the Investment Advisers Act of 1940, investment advisers are regulated by the Securities and Exchange Commission (SEC) or appropriate state authorities and are required to provide services to their customers under the fiduciary standard. CERTIFIED FINANCIAL PLANNER™ professionals providing financial planning services also must abide by the fiduciary standard, as defined by CFP Board.
Fiduciary Standard

Now, whether the CFP's advice is worth the 1% fee he is charging is another matter. Along with many others on this forum, I am a do it yourself investor and know perfectly well I could put together a portfolio that would perform similarly to the CFP's recommendations, which appear to be basically a 50% stocks, 47% bonds, 3% cash asset allocation.

But OP admits to being a novice at investing, NOT a DIYer. Under the circumstances, I consider the OP should seriouly consider sticking with the CFP's advice. At some point in the future, OP may advance beyond a novice investor and be ready to make independent financial decisions, but I don't think we're quite there yet.
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Old 09-13-2015, 09:11 AM   #51
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I must admit to a passion for low cost index funds (set it and forget it investing); it occurs to me that with that many funds you are essentially creating a broad based index. Having said that wouldn't having say 2 or three low cost vanguard index funds be a more efficient alternative?

In my humble opinion Lose the CFP (I hope you paid by the hour). Have you looked at the admin fees on all those suggestions?

Remember over time nearly all managed funds don't beat the market. So reducing fund admin cost is critical... Oh and those CFP fees ugh!


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Old 09-13-2015, 09:18 AM   #52
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This should not be surprising. If the financial advisor truly is a CFP, he is required to adhere to a fiduciary standard of putting his clients' interests ahead of his own when giving professional advice.
Alright, if you want to defend this CFP, a good place to start would be with those expensive bond funds. They have ERs of about 0.5% above functionally equivalent bond funds that are readily available. How can we possibly say they meet the "fiduciary standard" of being in the client's best interest, rather than those of the CFP? I know CFPs do it all the time, but it's not at all in the client's best interest.

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Under the circumstances, I consider the OP should seriouly consider sticking with the CFP's advice. At some point in the future, OP may advance beyond a novice investor and be ready to make independent financial decisions, but I don't think we're quite there yet.
And then what will she do? We don't know if these are taxable accounts or not--selling these loser high-fee funds and getting new ones could require that she pay a lot of cap gains taxes. And then she'll get to fight the CFP's efforts to hold on to her account (see the many threads by folks who have struggled to get free of Ameriprise and other CFPs--Lisa99 documented her experience well). Why not just start out on the right foot? The OP is asking the right questions and has shown a willingness and ability to do research. Nothing about this investing is hard--she's one good book and a few hours away from being set to do this herself. I'm not ready to infantalize her and urge that she just go along with the nice man who will take her money and leave her with a bigger mess to clean up. She's a retiree, the 1% fee paid to this CFP will cost her about 25% of her annual withdrawals from her savings--does that seem like a good use of her funds, compared to doing some reading and getting good guidance here? If she spends 20 hours on reading/posting/setting up the accounts, that's quite an attractive payback, and in future years it will take her far less time.
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Old 09-13-2015, 11:34 AM   #53
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I guess looking at the portfolio I'm just irked for a few reasons

High expenses in the funds. As samclem has pointed out.
The 1% fee above that for simply buying funds and ETFs. That's ridiculous in this day and age.
The 2.5% portfolio allocations. The 3.8% allocations etc. I see that as an attempt to build up the portfolio to make it look more sophisticated to a newbie investor when I truly believe little allocations like that make no sense.

So maybe he's not a charlatan, but all of the above are in no way in the OPs best interest. I would think that the best compromise for the OP would be using Vanguard Advisor for 30 basis points, if she doesn't want to do it herself.




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Old 09-13-2015, 11:58 AM   #54
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Too many funds are proposed. It looks like the overall proposed asset allocation (AA) is 50% equities/47% bonds/3% cash. You could probably get similar investment results at a much lower cost with 3-5 Vanguard funds and an online savings account for cash.

For example:

50% - Vanguard Total World Stock ETF - 0.17% ER
47% - Vanguard Total Bond Market ETF - 0.07% ER
3% - online savings - 0.00% ER

Or you could even do it with just one fund... Vanguard's 2015 Target Retirement is 50/50 and the 2020 Target Retirement is 60/40... so pick one and let them d the driving for you for 0.16% a year. The 2020 version has had returns of 8.01%, 9.38% and 5.83% for 3 years, 5 years and since inception on 6/7/2006. I wonder what the proposed portfolio returns have been for the last 3 and 5 year periods.

https://personal.vanguard.com/us/fun...tExt=INT#tab=2
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Bond Funds in Retirement
Old 09-13-2015, 03:35 PM   #55
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Bond Funds in Retirement

I really don't like bad mouthing CFPs but geez 1%? That's a lot of money. Let's say you do well and the last 5 years before retirement you have a million dollar portfolio. (Yeah sounds like a lot of money but there are many people who have it.) that 1% will be $10,000 a year for 5 years or $50 large! (Sorry got into my James Cagney I mean Thousand) not count the Vig (ops did it again - I mean interest).

Me I'd rather have that money for the wife I'm sure she will out live me by many years (only the good die young). What I suggest you do is Google transparent investing - "the whole story". Read it and every thing you can on index funds and low cost investing. Warren buffets letter to the shareholders are also excellent reading as well.

A CFP takes a broad based exam but it doesn't mean he or she is a prudent investor.

I want you to watch Wall Street, the Boiler Room, and the wolf of Wall Street then fire him or her and take the advice offered on vanguard funds.. If you are really angry for 25 large I can make the CFP have an accident (just kidding, I really need to avoid those Cagney movies)

If you must use a CFP (I wouldn't) get one that charges by the hour. If they try to sell you anything fire them immediately and run away!

Corny jokes prudent advice
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Old 09-13-2015, 04:02 PM   #56
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A good, and short, book that gives a good foundation in managing your investments is "The Investment Answer" by Daniel C. Goldie and Gordon S. Murray. You can get it on Amazon. It's a quick read and, by giving you solid background on investing in an organized fashion, would prep you to go through the many good recommendations already put forth in this thread and apply them to your situation. Don't be rushed into making these big investment decisions until you are ready and feel comfortable with the path you are taking. A little study may help you feel much more confident in your choices.
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Old 09-13-2015, 04:16 PM   #57
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If you don't feel comfortable with DIY and must have some handholding when it comes to managing your investments, consider Vanguard Personal Advisor services. They're more expensive than DIY (0.30% AUM) but probably a far better option than the CFPs you've had so far.
+1. The OP could do it herself after a bit of reading, probably save a lot of money, and be set up to easily maintain her accounts for the rest of her life. But if she just doesn't feel comfortable doing that, using Vanguard Personal Advisor Services has 3 major advantages over using her present "advisor":

1) The fee paid to the advisor will be 70% less. Every year.
2) The funds they'll recommend will be low in cost, saving her a good deal of additional money every year.
3) She'll won't have to fight to get her money away from her high-fee advisor if/when she decides she's getting taken advantage of. She'll already have accounts set up at Vanguard, her automatic transfers will be set up so she can see and change them whenever she wants, etc. It will be a smooth and simple transition to doing things on her own.

It can be difficult to find an advisor who bills by the hour and doesn't accept any money from the products sold to clients. This is especially true if one doesn't live in a major town. So, if the "assets under management" fee schedule is used, 0.3% is a lot better than 1.0%
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Old 09-13-2015, 04:39 PM   #58
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I don't think the question is whether the CFP is a charlatan or not, but rather does the added extra expense for his/her recommendations make sense. Clearly, as others have pointed out the mix is more complicated than necessary, but the fees add up to 1.65% of the portfolio, 1.70% if you exclude cash. How can this make sense when you can do it all for no more than 0.20%.

As others have pointed out before me. You have to educate yourself. It is your money, and no one cares more about your money than you. And once you know enough to be able to choose a CFP, then you don't need one.

When the expected long term return may be somewhere around 4%, why would you want to give 1.65% to your adviser. You are giving more than 40% of your income to your CFP! Now does that make any sense? Especially since it is now so easy to do on your own using a place like Vanguard.

Hmmm, 40% of my money to my adviser every year, up market or down market to do nothing but what? Watch his money come in?

Ok, I do have something good to say about one adviser of a friend of mine, he kept him from selling in the 2008-9 decline. But what about the others that told their clients to get out. How stable will yours be? And after your study you should be able to learn not to sell out in panics.

This is really not rocket science.
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Old 09-13-2015, 04:48 PM   #59
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Hi all and thanks for taking your time to help us. All our accounts are in IRAs. We have 5 funds we brought over from Ameriprise and a partial transfer of a variable annuity cash out. We didn't want to pay a surrender charge so are waiting to cash out the rest. A rollover from our 401(K) is in cash. In fact, most of our account is currently in cash and is in the process of being transferred to the CFP. No trading has started, and I told them to wait on any investing until we do due diligence. We are 66 and 70 and my husband is semi-retired and self-employed so we want to open a solo 401(K) to help with taxes. I am overwhelmed by all of the help I have gotten from all of you. If anyone has additional books, blogs, movies or movie quotes, or sample portfolios to share, I will welcome those. (A movie quote I especially like is from Rounders: "You can't lose what you don't put in the middle." I am calling Vanguard first thing in the morning and investigating a low-cost, simple portfolio. If you think of anything else that will help guide me with that please let me know. I am considering beginning with the Vanguard advisor and then turning that off when I am set up and comfortable with what I'm doing. What does 30 basis points equal in dollars? I have head this term "basis points" but don't know how it translates to cash. Thank you, thank you, thank you, to all and sorry for the same question on 3 forums--as a newbie, I don't yet know how many of you read the same forums and I wanted to get a lot of feedback in a short time (a wide net). Where should I post new questions on Vanguard investing? I will check this thread but want to start posting where it will make the most sense. Sending you all the best.
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Old 09-13-2015, 05:02 PM   #60
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I am calling Vanguard first thing in the morning and investigating a low-cost, simple portfolio. If you think of anything else that will help guide me with that please let me know. I am considering beginning with the Vanguard advisor and then turning that off when I am set up and comfortable with what I'm doing.
That's probably a good approach. As preparation, I'd recommend you visit the links provided by California Man in post #42.

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What does 30 basis points equal in dollars? I have head this term "basis points" but don't know how it translates to cash.
A "basis point" is just 1/100th of a percent. So, 30 basis points is .30%. Your present CFP is charging you 100 basis points.

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Where should I post new questions on Vanguard investing?
You can get help on this board, as a lot of us are Vanguard investors. A more specialized board just for Vanguard investors is the Bogleheads board at Bogleheads - Index page
The Bogleheads site on Morningstar used to be very popular many years ago, but the above link goes to where the main action is now.

Don't be a stranger! You'll find all of this to be very simple, but your CFP won't make it sound like that. Glad you got clear of the Ameriprise crew, but you're still in a high-cost CFP relationship. Variable annuities, Ameriprise, now this--uggh. That's a tough road, but you've made a lot of salesmen happy and probably paid for a set of braces or two for their kids. Now do something for yourself and don't look back.
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